Core Health and Fitness LLC, the Vancouver, WA-based parent company of Star Trac and StairMaster, has acquired the commercial assets of Nautilus Inc. from Med-Fit Systems Inc., Fallbrook, CA.
Dustin Grosz, president of Core Health and Fitness, told Club Industry in an exclusive interview that the deal was finalized last Friday. Grosz declined to share terms of the agreement.
Med-Fit Systems announced in April that it was putting its Nautilus commercial equipment division up for sale. At the same time, the company also announced plans to cut staff at its plant in Independence, VA.
Grosz says Core Health and Fitness already has hired more than 60 people to work at the plant and hopes to hire more by the end of the week.
"We'll hopefully be completely fully running by the end of the week or early next week," Grosz says.
Core Health and Fitness now owns the machinery and the equipment in the plant and has a lease option to purchase the buildings and land surrounding the plant in the next three years, Grosz says. The company will move some of its Star Trac strength business from its plant in China to the Virginia plant, Grosz adds. Initially, Nautilus equipment and Star Trac's selectorized equipment will be produced in Virginia, and Star Trac's plate-loaded equipment may be added, according to Grosz.
"[The state of Virginia] has provided funds for us to move forward with increasing jobs and bringing additional business back to Virginia," Grosz says.
Virginia Gov. Terry McAuliffe announced today that Core Health and Fitness is investing $2 million to expand the operation formerly run by Med-Fit Systems in Grayson County (VA). A total of 250 jobs will be created, McAuliffe added. The plant has manufactured Nautilus commercial equipment for more than 34 years.
After the sale of the Nautilus commercial assets was announced, Core Health and Fitness was one of more than 20 companies, according to Grosz, that signed non-disclosure agreements with Med-Fit Systems. Core Health and Fitness signed a letter of intent in June, he adds.
In addition to owning Star Trac and StairMaster, Core Health and Fitness, owned by Michael Bruno, licenses both the Spinning (from Venice, CA-based Mad Dogg Athletics Inc.) and Schwinn indoor bike brands and now licenses Nautilus, the brand made famous by inventor Arthur Jones.
"We feel we have now the best strength brand in the industry," Grosz says. "We feel that our portfolio brand is by far better than anyone in the industry."
Nautilus Inc., which still produces equipment for the consumer market, sold the StairMaster and Schwinn commercial assets to one of Bruno's legal entities in 2009. Two years later, Core Health and Fitness signed a license with Nautilus Inc. to produce the TreadClimber for the commercial market.
"Strategically, it fits very well," Grosz says. "Many of our current customer base, especially internationally, 85 percent of them are the same customer base. It slips in really nice with that side of our business because we already know all the customers. We can increase our revenue and really not have to develop a whole new customer base."
In late 2012, Star Trac and StairMaster received an infusion of capital as Core Health and Fitness closed on a $43 million debt facility with PNC Bank and UPS Capital Corp.